Question

6. Godiva & Company was recently formed with a $5,000 investment in the company by stockholders. The company then borrowed $2,000 from a local bank, purchased $1,000 of supplies on account, and also purchased $5,000 of equipment by paying $2,000 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are:

Answer 1

Answer:

Godiva& amp Company         $  

Cash(capital)                            5,000.00  

Cash(loan)                            2,000.00  

Inventory                            1,000.00  

Equipment                            5,000.00  

Cash(payment for equipment (2,000.00)

Total Assets                           11,000.00  

Explanation:

The approach I took in computing total assets for the company was to reflect the impact of each transaction on the asset of the company ,where asset increases is a positive figure and negative when it reduces for instance payment of $2000 in respect of equipment purchase.